B.C. economy stagnates under NDP rule: University of Calgary report

CALGARY — British Columbia’s economy tends to stagnate when Canada’s westernmost province indulges its left-leaning impulses at the ballot box, according to research recently compiled by the University of Calgary.

Relative to the rest of the country, B.C.’s economy weakened throughout the 1990s under previous NDP leadership, a trend only marginally improved under Gordon Campbell’s Liberal government, said Jack Mintz, director of the school of public policy at the school.

“B.C. has lost a lot of large corporations [since the ’90s], but there are a few still headquartered there,” Mr. Mintz said. “You know, there were a lot of start-ups there and if I were a start-up, I would seriously start to think about whether B.C. is the place I’d want my headquarters.”

NDP leader Adrian Dix, who is set to topple Christy Clark’s Liberal government next Tuesday according to polls, has proposed a rash of economic policies ranging from tax hikes on corporate income and the wealthy, to a tax on banks, to the expansion of the province’s carbon tax.

Meanwhile, a business group in B.C. said workers are already trying to expand union membership in hopes of an NDP government that would make it much easier for unions to form and organize.

If all this comes to pass, Mr. Mintz said he expects the province will continue its trend toward economic irrelevance compared with the rest of the country.

“If we see corporate tax hikes and opposition to projects being contemplated, Alberta can take out its well-trodden mat and invite people to set up business here,” he said.

A punitive tax structure and high property prices make a trip across the mountains — a move that becomes easier for companies as technology progresses — ever more attractive.

“I think it’s going to be a very serious problem for B.C.,” Mr. Mintz said. “I don’t think this election is going to help in the least bit.”

The economist compiled data from Statistics Canada comparing relative private investment for the past two decades. In 1994, B.C. and Alberta were about equal, each claiming just over 16% of the country’s annual private capital and repair expenditure. In 2011, the difference was stark; Alberta had almost 27% of the share of the Canada’s private investment, B.C. had just 12%. And although some of the difference can be traced to Alberta’s booming oil and gas sector, certain trends are becoming apparent.

At one point, Ontario boasted 36% of Canada’s investment. In 2011, it claimed only 29.5% — barely more than Alberta’s, even though Ontario has more than three times the population.

Quebec’s share of investment has also recorded a steady decline.

“The interesting story is that if you look at private-sector investment in Canada today, it really is all about Ontario, Saskatchewan and Alberta,” Mr. Mintz said. “And Ontario’s share has dropped.”

At its lowest point in 2001, B.C. claimed only 11% of Canada’s share of private investment for that year, a figure that steadily improved, but never entirely recovered under Mr. Campbell, premier from 2001 until 2011.

“We lost a lot of our head offices in the ’90s,” said John Winter, the president and CEO of the B.C. Chamber of Commerce. “They haven’t come back and we’re not doing anything to attract them to come back.”

While relative share of investment can be affected by factors beyond politics, such as recessions or trade disputes, the impact of previous governments’ policies continue to be felt, he said.

“B.C. became a non-starter. It became a have-not province,” Mr. Winter said. “It was the only economy in North America to experience a recession in the ’90s.”

Ideas such as expanding B.C.’s carbon tax would do little except make the province less competitive than Alberta, he added. However, even Premier Clark raised taxes in a bid to balance the budget.

“We are looking at tax policies going in the wrong direction, there’s no two ways around that. You can’t grow economies based on increasing taxes,” he said. “Frankly, I can’t see anybody in Canada choosing B.C. over Alberta or Ontario at this point.”